The Renewable Energy Component of the Indo-German Energy Programme (IGEN-RE) is a bilateral cooperation project with the Indian Ministry of New and Renewable Energy (MNRE) carried out by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ). Launched in 2010, the project aims to promote renewable energy in rural areas. For more information please visit our website: www.igen-re.in.

Monday, 20 October 2014

- more efficient value chains and cold storage facilities could help West Bengal’s producers of fruits and vegetables improve their profit margins

It
is 07:30 in the early morning of a hot and humid day at Sealdah station in
Kolkata buzzing with commuters, “coolies”, and travelers going about their
business. We, two members of the IGEN-RE team of the German Development
Corporation, catch one of the local trains taking us through and out of Kolkata
and its peripheries, through rice paddies and jute fields up North to Nadia
District. We meet Ekta Jaju from SwitchOn, a grassroot organization working on creating
an ecosystem to facilitate last mile access to energy.

Increasing
farmers’ incomes is not synonymous to increasing productivity levels as is
often commonly believed. To the contrary, a more efficient point of
intervention could be tackling the post harvest value chain of fresh agricultural
produce, which, at its current state, is far from optimal. “For us, it is
important to take an integrated approach”, says Ekta; “one-sided approaches
will not necessarily have the greatest impact in a multidisciplinary and
complex sector such as agriculture.” Possible points of intervention, which have
partly already been undertaken by SwitchOn while others are yet to take off in
the near future, are the establishment of an adequate cold storage facility for
perishable produce, the support of pump entrepreneurs to switch from diesel to solar,
the establishment of a farmer producer company – short FPO - , the improvement
of marketing chains, as well as business ventures into organic farming and food processing.

Local market where farmers' produce is auctioned

to middlemen - the process is facilitators often

reap a significant share of the total profit margin

Due
to inefficient marketing chains not much of the money paid by consumers for
fruits and vegetables actually ends up in producer’s pockets, but is reaped by
a range of middlemen who cannot be considered to add much value to the overall
transaction. The establishment of a FPO is supposed to change this by enabling
producers to gain greater profit margins from their goods. Currently, few
farmers market their own produce but instead depend on brokers and wholesalers to
do so leaving farmers in poor bargaining positions. This is where the FPO comes
in: the FPO has a small truck which enables them to collect large amounts of
produce and sell it at the market where prices are highest on that day. In
order to be a member of the Farmer’s Producers Company, 5 shares for 500 INR
have to be bought. In return, minimum prices for produce equaling the best available
market price on this day are being offered. FPO members will further benefit
from less tangible services such as soil testing, better access to high quality
and good price seeds and fertilizers, and technical trainings, for example on
organic farming.

Construction of the cold storage facility in September 2014

But
this is not all. Today, about 30% of fruits and vegetables that are harvested
in India go to waste. Most food consumed in India is perishable; however,
adequate storage facilities are lacking resulting in a dilemma for producers
who are forced to sell their harvest as soon as possible, regardless of market
prices. This leads to price fluctuations for producers and consumers alike
since price crashes during peak seasons and price hikes in off-seasons are the
natural consequence. The main influencing factor in shelf life and product
quality is temperature control; however, cold storages are capital and energy
intensive making them inaccessible for small-scale farmers. With the support of
IGEN-RE programme, SwitchOn is in the process of installing a hybrid cold
storage facility powered by PV panels during the day and grid electricity
during night hours. The plan is to store high value as well highly perishable
produce, which is expected to yield higher market prices in the near future.

The
role of IGEN-RE is to monitor the set up and operation of the facility ensuring
data collection of the type and quantity of produce stored, running cost
incurred, and price differences achieved. The aim is to test the economic
viability of the hybrid system and to generate lessons learned regarding the
scale-up and replicability of similar projects.